Cash and the Long Game of Retirement

Retirees are the big spenders of today but also the biggest savers. However, ninety percent of American retirees are concerned that inflation is eroding the value of their assets, and 87 percent are worried about higher-than-expected healthcare costs, according to Schroders’ 2026 US Retirement Survey, released in July.

The savings math paints a telling picture. American retirees today hold an average of $288,700 in savings and investments for a retirement they themselves estimate requires $823,800, according to Clever Real Estate’s January 2026 retirement report; 29 percent have no retirement savings at all. Working Americans participating in workplace plans put the target higher still: $1.2 million, per Schroders, with 51 percent expecting to reach retirement with less than $500,000. Retirees feel behind because they are behind, at exactly the moment life expectancies are pushing retirement horizons past 30 years.

The response has been a historic flight to cash. On August 12, the Wall Street Journal reported that U.S. retail investors are now sitting on roughly $3 trillion in money market funds, what the WSJ calls the "Wealth Management’s $3 Trillion Problem." Retirees are the largest and stickiest cohort holding it. Anonymized Empower data as of March 2026 shows investors in their 80s hold 40.5 percent of their portfolios in cash; in their 90s, 45.7 percent. Financial advisors keep asking them to redeploy. The clients keep saying no, and for good reason.

The classic 60/40 portfolio has disintegrated through repeated bond market drawdowns with equities in tow. The current record equity valuations provides for meagre comfort, especially when combined with global geopolitical tensions. If the stock market statistically goes through major corrections say every 10 years, then retirees nowadays probably need plan for 2-3 of them, and they are somewhat logically choosing cash to do so. But over 30 years, and held in the wrong place, cash too becomes a rapidly depreciating asset. A $400,000 cash cushion held at typical savings-account yields will lose roughly a third of its real purchasing power over a 30-year retirement at a 3.5% inflation rate. Today it is both reasonable and prudent for financial planners to assume that inflation continues to remain elevated well beyond the 3% rate average we have seen over the last 50 years due to macroeconomic factors such as government deficits, tariffs and energy pricing.

The mismatch between supply and retiree demand

Managed portfolios optimize for growth, but retirees will not put "safe money" into them; the whole point of the safe bucket is that it is not at market risk. Products like annuities offer downside protection, but at the cost of the liquidity and simplicity retirees prize, with fee structures they struggle to understand. Money market funds and high-yield savings accounts are liquid and stable, but their yields track the short end of the curve and cap upside by design; over a 30-year horizon they are structurally guaranteed to lose ground to inflation. Rolling short-term Treasuries, a laddering strategy many advisors have leaned into as yields ticked up, inherits the same weakness: yields reset with the short end of the curve, so when rates fall, typically alongside the equity drawdowns retirees fear most, the payoff collapses precisely when it is needed most. Over a full retirement cycle, short-term Treasury yields historically average close to inflation, leaving little in real terms. CDs pay a fixed rate in exchange for locking up capital, and auto-renew at unpredictable rates that leads to a complex laddering dance which in aggregate is likely not yielding more.

Every one of these tools was designed for more defined and shorter retirement widows of say 10-15 year where statistically not a 30-year one. None solves the actual constraint a modern retiree faces: safety, liquidity, and inflation-beating potential, all at once to cover for all lifes eventualities in a 30 year window.

A different way to talk about safe money

At Save, we built the Market Savings Sub-Advisory Program to close that gap. The thesis is relatively simple; if you believe that inflation and other factors will continue to push up equities and risky assets, then is it not better to try to generate your yield from such assets, provided your capital stays uninvested, safe and liquid?

Offered through Registered Investment Advisers, the program combines two things clients today have to choose between rather than combine: FDIC-insured principal protection and market-linked growth potential. The client’s principal sits in a deposit account at an FDIC-insured bank and is never invested. Instead, discretionary investments are made that aim to create a better yield potential.

For the client, the experience is straightforward. The principal is protected. The cash remains fully liquid. And the yield, instead of being capped by short-term rates, can track the same market strategies that drive the rest of their portfolio. The variable yield is not guaranteed, and can yield zero if markets don’t perform, but structurally, the client is no longer paying a 30-year inflation cost on the money they hold to feel safe.

Changes in retirement planning

The impact shows up in the specific corners of the retirement plan where clients most want confidence.

Retirement planning. The safe bucket stops being a slow leak. Clients no longer watch several years of living expenses silently lose ground while the rest of the portfolio does the work.

Long-term care and healthcare planning. Clients who have earmarked a dedicated LTC or medical reserve face inflation curves steeper than almost anywhere else in their financial life. A reserve that can track market returns while staying FDIC-insured and fully liquid is a far better match for a 20-year LTC horizon than a savings account.

Estate planning. Wealth intended for heirs often sits in cash-adjacent accounts for years while other assets are drawn down first. Under the traditional model, that intergenerational money quietly loses purchasing power the entire time. Under a Market Savings program it can potentially do the opposite.

Financial wellness. When clients know their cash cushion has principal protection and growth potential, they are less likely to panic-sell equities in a downturn and less likely to over-hoard cash out of anxiety. A better safe bucket makes for a better investor, and over 30 years, a more confident retiree.

The bigger picture

The $3 trillion sitting in retail money market funds is not a portfolio construction problem. It is a confidence and a product problem. Clients are running to cash because nothing on the shelf tackles the eventualities of a 30-year horizon. They cannot be argued out of that instinct, and they should not be. They need a version of cash that actually earns their confidence: safe, liquid, and structurally capable of keeping up with the life they are planning to live. For a generation living longer than any before them, that is the difference between a plan they hope will hold up over 30 years, and one they can feel confident actually will.